THE IMPACT OF A SUSTAINABLE COMPETITIVE ADVANTAGE ON …

Global Journal of Human Resource Management

Vol.6, No.5, pp.30-46, November 2018

___Published by European Centre for Research Training and Development UK (www.eajournals.org)

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Print ISSN: 2053-5686(Print), Online ISSN: 2053-5694(Online)

THE IMPACT OF A SUSTAINABLE COMPETITIVE ADVANTAGE ON A FIRM’S

PERFORMANCE: EMPIRICAL EVIDENCE FROM COCA-COLA GHANA

LIMITED

Asante Boakye Elijah and Adu-Damoah Millicent

Author Affiliation, University of Electronic Science and Technology of China, People’s

Republic of China.

ABSTRACT: Current organizations turn to many standard techniques to achieve competitive

advantage, and if they are sustainable, then the organization benefits from the competitive

advantage. As markets grow more saturated, only the organization with the highest sustainable

competitive advantage will benefit the most. The primary objective of this study is to ascertain

the impact of a sustainable competitive advantage on firm’s performance using evidence from

Coca-Cola Ghana limited. The population included employees of Coca-Cola Ghana Limited

in the four main regional capital cities and affiliated stakeholders. The data collected from 356

respondents were analyzed with Smart PLS statistical software. The results from the Structural

Equation Model (SEM) revealed that sustainable competitive advantage is positively related to

organizational performance. Resources and competitive environment have a moderating effect

on firm’s strategy. It also established that resources and competitive environment are directly

related to firm’s performance. Finally, it confirmed the relationship between human resource

strategy and firm’s performance as positively related. The study concludes that the effects of

the firm’s strategy, resources and competitive environment and human resource strategies on

sustainable competitive advantage are undeniable and they have numerous impact on firms’

performance.

KEYWORDS: Competitive Advantage, Sustained Competitive Advantage, Firm

Performance, Coca Cola Ghana Limited, Partial Least Squares.

INTRODUCTION

In these modern times, many firms worldwide are belligerent to cope with increasing

competition since it has therefore turned into the first agenda for these firms. Past years also

recalls much enduring and increasing intensity of competition among firms until this day. Most

firms make choices that affect their competitive stand and profitability using strategic

management and strategic planning which is expected to help the firm position itself against

their rivals in the quest for upper hand. Since there are many relations and interdependencies

among activities in the value chain of firms, the ability to co-ordinate interrelationships is

critical to achieving competitive advantage (Porter, 1985). This is undertaken to help the firm

position itself against its competitors in the pursuit of competitive advantage. Firm profitability

is a function of organizational attractiveness (structure) and the firm’s relative stand within the

industry. A robust comparative view implies that the firm has a competitive gain that can be

unremitting against occurrences by competitors and changes in the industry. The quest for

industry attractiveness and analysis of competitors can guide a firm in its decision of

competitive strategy.

A firm’s search for competitive advantage begins with the strategic choices it makes in regards

to its position in an industry. However, a firm must also understand how to make an

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interpretation of competitive strategy into a competitive advantage. A firm must define how to

implement the competitive strategy selected to achieve competitive advantage. The subject of

firm performance is very principal in strategy research for decades and incorporates most

relevant questions that have been discussed in the field, as, why firms vary, their behavior, how

strategies are chosen and how they are managed (Porter, 1991). In the 1990s, as the resource-

based technique arose, the focus of strategy researchers regarding the sources of sustainable

competitive advantage moved from industry to firm-specific effects (Spanos and Lioukas,

2001). Initiated in the middle of the year 1980s by Wernerfelt (1984), Rumelt (1984) and

Barney (1986), the resource-based view (RBV) has then become one of the leading

contemporary techniques to the study of sustained competitive advantage. A central origin of

the resource-based view is that firms compete by their resources and capabilities (Peteraf and

Bergen, 2003). Most resource-based view researchers choose to “look within the enterprise and

down to the factor market conditions that the enterprise must contend with, to search for some

possible causes of sustainable competitive advantages” with all other external environmental

factors being held constant (Peteraf and Barney, 2003). This inward-looking technique has

therefore demonstrated to be both significant and useful for the analysis of many strategic

issues (Foss and Knudsen, 2003), among which is the conditions for sustained competitive

advantage and diversification.

The Beverage Industry of Ghana is a matured sector which includes companies that trade in

non-alcoholic and alcoholic stuffs. Since growth opportunities are few as compared to existing

business, most members of the industry attempt to diversify their offerings to compete better

and gain market share. They may pursue lucrative distributive measures and acquisitions so as

to increase their operations, product portfolios, and geographic scope. Most substantial

companies do offer reliable dividends, with consistent increases, and above-average Stock

Price Stability. The non-alcoholic beverage industry in Ghana is known to be dominated by

two large entities: Pepsi (PEP) and Coca-Cola. They issue their favorite carbonated and non-

carbonated drinks internationally through substantial bottling companies. The industry giants

normally boost their results (and those of their subsidiaries) by acquiring smaller market

players or by inking promising distribution contracts. Firms’ performance has been a

fundamental issue in strategy research for decades, and the focus has been why firms differ in

performance. Organization strength is known as actors’ purpose in its competitive advantage

and other organizational factors. Kabue and Kilka (2016) posit that firms with a more efficient

networking strategy will obtain more competitive information than other firms. This

information advantage normally leads to enhanced new product performance and improved

overall performance of the firm. In view of this very competitive market, firms must quickly

hold extraordinary opportunities, respond to threats and outmaneuver their rivals to sustain and

succeed.

To achieve firm performance within the sustainable competitive advantage scope, decisions on

influential firm’s competitive strategies are one of the leading issues for directors under firms’

business level strategy. Because the formulation and accomplishment of competitive business

strategies that will expand performance are one of the competent methods to realize the firm’s

sustainable competitive advantage. Therefore, the effect of competitive strategies on firm

performance is a significant issue of unease to the policymakers and has been playing a vital

role to refine firm strength at length. This position is interpreted into higher profits compared

to those obtained by competitors working in the same industry. Truly, understanding which

resources and firm behaviors lead to competitive advantage is considered to be the fundamental

issue in strategic management studies (Porter, 1980).


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The Coca-Cola Ghana Bottling Company came from the divestiture of Bottling Division of

G.N.T.C in March 1995 and has invested around US$90 million in vehicles, plastic bottles,

glass bottles, plastic crates, production, and marketing equipment. The Company produces and

markets seven main brands, five carbonated soft drinks, and two water brands. The carbonated

soft drinks include; Coca-Cola, Fanta, Sprite, Schweppes, and Krest with Dasani and BonAqua

as the two water brands. The Beverage industry has a crucial influence on the Ghanaian

economy; there has been limited attention given to competitive strategies that will allow the

industry to sustain its competitive position in the markets. To make a role in this direction, this

study aims at probing the impact of a sustained competitive advantage on a firm’s performance.

LITERATURE REVIEW

Competitive Advantage

Li et al.,(2006), defines competitive advantage as the “capability of an organization to create a

defensible stand over its competitors.” This can be achieved if the firm’s value/cost gap is

greater than that of her competitors. Tracey et al. (1999) contends that competitive advantage

embodies the distinctive competencies that sets an organization apart from its competitors, thus

giving them an upper hand in the marketplace. They further added that it is an outcome of

critical management decisions. Competitive advantage traditionally involves the choice

regarding the markets in which a firm would compete, defending market sector in clearly

defined segments using price and product performance qualities. Today, however, competition

is thought of as a war of movement that depends on anticipating and rapidly responding to

changing market demands. Competitive advantage arises from the creation of superior

competencies that are leveraged to generate customer value and achieve cost and/or

differentiation advantages, causing market share and profitability performance (Barney, 1991)

Sustaining competitive advantage entails that firms set up boundaries that make imitation

challenging through continual investment to boost the strength, making this a long-run cyclical

process. Porter's approach to competitive advantage centers on a firm’s capacity to be a low-

cost producer in its industry, or to be exceptional in its sector in some aspects that are popularly

appreciated by customers (Porter, 1991).

Theoretical Pursuit of Competitive Advantage

Studies investigating firm performance, have drawn attention to the essence for understanding

the foundations of sustainable competitive advantage. Such demand is central to most firms’

mission and has become a key area of study in the field of strategic management. The concept

of competitive advantage is built on the premise that firms can establish a differential advantage

over their competitors. That is, competitive advantage is discussed from a perspective in the

literature (Barney 1991). Reaching competitive advantage should be the goal of a firm’s

strategy with the outcome manifesting as above - average returns for the firm (Barney 1991;

Porter 1985). It is presumed that the desired outcomes of a firm’s attempts in seeking a

competitive advantage, is sustainable and will not be easily destroyed (Peteraf 1993). That is,

for firms to earn above normal profit, its competitive advantage must be sustainable. To gain a

competitive advantage over its rivals, the firm must provide comparable buyer value and

perform activities more efficiently than its competitors, or provide activities in an exclusive

way that produces greater buyer value and commands a premium price (Porter, 1985). A firm

can gain an edge over its competitors in the following two ways:





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Through external changes. When PEST factors are adjusted, many opportunities can come up

that, if taken advantage of, could offer many benefits for an organization. PEST stands for

political, economic, socio-cultural and technological factors that influences a firm’s external

environment. When these factors change many possibilities arise that can be utilized by an

organization to achieve advantage over its rivals. An organization can also gain the upper hand

over its competitors when it is capable of responding to external changes quicker than other

organizations.

By developing them inside the company. A firm can accomplish cost or differentiation

advantage when it develops VRIO assets, through innovative procedures and products. A firm

that possesses VRIO (valuable, rare, hard to imitate and organized) resources has a prevalence

over its competitors due to the superiority of such resources. If a company earns a VRIO

resource, it means no other company can acquire it (at least temporarily). This would be further

explained in the literature.

Competitive Advantage Sustainability

Barney, 1991 defines competitive advantage as when a firm is applying a value creating

strategy not concurrently being employed by any existing or budding competitors, and also

posits that a firm is said to have a sustained competitive advantage when it is realizing a value

creating strategy not simultaneously being carried out by any present or probable competitors

and when these other firms are incapable to reproduce the benefits of this strategy. These

explanations do not center solely on a firm’s competitive position vis-à-vis firms that already

operates in the industry, but Barney, 1991 suggests that, competitive advantage whether

sustained or not, depends on the likelihood of competitive duplication. Following Lippman and

Rumelt (1982), a competitive advantage is sustained only if it exists after efforts to duplicate it

have ended (Barney 1991). In theory, the definition of sustained competitive advantage has

numerous advantages, not in the least of which that it evades the problem of specifying the

length of calendar time firms in disparate industries must enjoy competitive advantages in order

for those advantages to be “sustained”. Empirically, sustained competitive advantages, on

average, may last a long period of calendar time. However, this period of calendar time, does

not define the existence of a sustained competitive advantage but the inability of existing and

potential competitors to duplicate that strategy that makes a competitive advantage sustained

(Barney 1991). Lastly, that a competitive advantage is sustained is not indication that it will

“last forever”. It only suggests it will not be competed away through the duplication efforts of

other firms (Barney 1991). Unforeseen changes in the economic structure of an industry can

make what was, at one time, a basis of sustained competitive advantage, no longer valued for

a firm, and consequently not a source of any competitive advantage.

Firm Performance

The performance of a firm is a significant construct in strategic management research and often

used as a dependent variable. The notion of firm performance must be distinguished from the

broader construct of organizational effectiveness. Taking into consideration the factors like

official and unofficial structure, reward systems, planning systems, control and information

systems, skill sets and personalities, and the relation of these to the environment. Wernerfelt

(2007) opine therefore that managers influence organizational outcomes by establishing

‘context’ and that context results from a complex set of psychological, sociological, and

physical interactions. Another unsettling fact of firm performance is the use of past

performances as performance indicators. Hence, defining firm performance as the satisfaction





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of stakeholders helps to distinguish between antecedents, and performance outcomes embraces

all players of the firm. More so, the time period and the reference point are other phases of

performance to review when defining firm performance. Another issue is the interval- short,

medium or long term, should all be considered.

Model and Hypothesis Development

Studies have revealed that there is a significant relationship between competitive advantage

and performance. Ray et al., 2004). Fahy (2000) argues that the achievement of a sustainable

competitive advantage stance can be anticipated to lead to higher performance, regularly

quantified in conventional terms such as market-share and profitability, that is the financial

performance measurement approach. Also, emphasizing on the view that competitive

advantage and performance are two different concepts and scopes, firms ought to shift their

focus on managerial strategy towards attaining and sustaining competitive advantage position

over their rivals. Subsequently, such a competitive advantage position will lead to higher firm’s

performance. Bearing in mind the notion that competitive advantage is a relational concept and

also context-specific, there are possibilities that competitive advantage does not result in

superior firm’s performance, and there are also likelihoods that a superior performance can be

achieved without the firm attaining and/or sustaining competitive advantage position.

However, mostly, the first condition that competitive advantage will lead to superior

performance will prevail given the fact that firms focus their competitive strategy towards

enhancing their resource pool (Fahy, 2000). Indeed, as Barney (1991) has argued, firm’s

resources which include all its assets, capabilities, organizational processes, firm’s attributes,

information, knowledge, and so on owned and/or regulated by a firm will eventually enable the

firm to conceive and implement strategies that will improve its efficiency and effectiveness,

hence superior firm’s performance. They argue that performance should be grounded on a

broader concept instead of just on financial performance dimension, namely, overall

performance (that is, offerings and competencies), customer-focused performance, investor-

based performance and worker-based performance. The study computes performance

according to products & services, internal processes, growth, capabilities & skills, quality,

sacrifice, value & satisfaction, revenue, growth, profit, personal development, empowered

teams and employee satisfaction.

In another study, Kaleka (2004) focus on the significant interaction among available resources

and capabilities, competitive strategy decisions, competitive advantage and performance

aftermaths in the export venture. The definition of a Sustainable Competitive Advantage (SCA)

is a long-term approach or strategy to tolerate a firm to uphold its lead of its competitors. As

compared to short-term advantages, like being the first to outdoor a new type of product, a SCA

may be fostered into the frame of a business. In doing so, it will qualify the firm to prolong its

supremacy over a longer period. On the other hand, organizational performance (OP) is

expressed as the analysis of a firm’s performance with regards to its aims and objectives. It

could be measured in terms of ROA (Return on assets) and Sales Growth Ratios because these

ratios are referred as financial performance measuring ratios. Based on the elaborate literature

above, these hypotheses were formulated;

H1: A sustainable competitive advantage is positively related to organizational performance.

Firm’s Strategy and its Competitive Environment and Resources: With regards to Resources

definition, Barney (1991) said firm resources comprise of the following: assets, capabilities,

organizational processes, firm qualities, information, knowledge, etc. and these are managed


http://www.wisegeek.com/what-is-a-competitive-advantage.htm

http://www.businessdictionary.com/definition/analysis.html

http://www.businessdictionary.com/definition/performance.html




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by a firm to help it consider and implement strategies. Porter (1980) recognized five forces of

competitive environment as follows: bargaining power of sellers, bargaining power of

customers, threat of new entrants, threat of substitution, and rivalry among existing

competitors. The list reflects Porter’s implementation of a market power viewpoint and is ill-

suited to sway the influence of the competitive environment on sustained competitive

advantage and performance. For instance, when customers bargain for the firm’s value created

(as market power perspective), the price of the product is then determined by their willingness-

to-pay (efficiency perspective). Notwithstanding the market power perspective, Porter’s

framework is implementable for analysis of the competitive environment. The more powerful

a force may obtain the less profitable the firm will be. For instance, in terms of customer force,

the firm strategy must be adjusted in response to requirements of new customer due to the

composition change of the firm’s target market and also changes in the needs of the customer.

The firm can focus her strategy on delivering extra value to customers than her competitors but

customer worth might change.

Therefore, the firm need to continually survey her market environment to seek if existing

customers are being replaced by new ones in her target markets or customers want different

service level than previously. In terms of supplier force for instance too, dealing with a

particular supplier due to the unique characteristics of the product supplied, if the supplier goes

out of business, the firm needs to adjust her strategy to underscore different competitive

advantages. Example, if the firm competes on price due to the supplier having the lowest prices,

then the firm is forced to raise her prices and promote the products as the cheapest ones that

can fulfill certain advanced functions. Also, the firm competitors’ behavior is a major factor

influencing the firm’s strategy. While the firm evaluates the existing competitors’ actions, the

firm should also check for new entrants into her market. Meanwhile the firm must still adjust

her strategy since her competitors are mostly reacting to her actions. Therefore, to benefit from

the firm’s strategy changes, the firm must think ahead on how each competitor is likely to react

to the firm’s adjustments. Then the firm can proceed with those factors that provided the

favorable competitive environment. Resources have a rent-producing possibility provided they

add to the build- up of competitive advantage. Resources with a continuous rent-producing

potential are referred to as strategic resources.

H2: Resources and competitive environment have a moderating effect on firm’s strategy.

Firm’s Performance and its Competitive Environment and Resources: A firm with competitive

advantage is not an assurance of an indication to a higher performance if compared to the

breakeven competitor in the industry.





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Figure 2-1 The VRIO Framework Source: Raduan et al.

The model above proved that the Resource Based View of the firm’s Competitive advantage is

a part of the main strategic management theories with regards to organizational consequences.

(Spanos and Lioukas, 2001, Peteraf and Barney, 2003) argued that in the 1990s, there were

several increments to the resource-based method with many researchers concentrating on the

sources of sustainable competitive advantage moving from manufacturing to firm explicit

effects. They continued that more resource-based view studies decide to “deal with the

enterprise and not fuzz about the factor market situations that the enterprise must deal with, to

explore some potential grounds of sustainable competitive advantages” owing all external

environmental factors constant. The research added that resources are used in the creation of

entry barricades thereby increasing performance at the industry level. For instance, Coca Cola

Ghana Limited can use its lobbying capability to prompt Ghana government to erect entry

barriers to enable the firms in the industry increase their prices. Based upon the above elaborate

literature that seeks to tackle firm’s performance with regards to competitive environment and

resources, the hypothesis below was formulated;

H3: Resources and competitive environment have a moderating effect on a firm’s

performance.

Human Resource Strategies in Sustainable Competitive Advantage: In today’s dynamic

business environment, human resource strategy is a dire area of concern that firms must

concentrate on due to increased competition. Currently the engaging and maintaining of highly

qualified staffs in organization is becoming more cumbersome as the advancement and

productivity of the organization hinges on how well the organization managed its human

resources. The functions of human resources that an organization performs in achieving the

organizational goals and missions may lead an organization to competitive advantage since the

organizational success or failure relies on how best it performs its functions likened to a

competitor (Competitive Advantage). This precedes the formulation of the forth hypothesis.

H4: Human resource strategies influence organizational competitive advantage and

performance positively.

The literature above shows that the idea of an impact of sustainable competitive advantage on

a firm’s performance, is constituted mainly by four parts, competitive advantage on firm’s

Competitive

Advantage

Performanc

e

Organizational

Resources,

Capabilities and

Systems





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performance, resources and competitive environment on firm’s strategies, resources and

competitive environment on firm’s performance, and human resource strategies. The literature

review then reveals that the four components stated above are in a positive relation to the

competitive advantage of firm’s performance.

Figure 2-2 Conceptual Framework, Source: Authors Construct, 2018.

METHODOLOGY

This study adopted the mixed method approach as a technique for gathering, analyzing and

combining both quantitative and qualitative data in a particular study to answer the research

questions. An Initial contact was established with the Coca-Cola Ghana limited for assistance

in the study covering the impact of a sustainable competitive advantage on a firm’s

performance. After the design, the questionnaires were sent out to be filled by the staff and

other stakeholders of Coca-Cola Company of Ghana. 359 out of the 400 responded. Data was

obtained through the survey questionnaire method which contained both closed and open-

ended questions. In the questionnaire design process, the issues of how to keep the questions

simple and apparently was acute to consider so as to avoid distortion of facts and findings. The

implementation of the survey for the study was classified into two categories. The first category

was to present the current demographical and descriptive statistics of the respondents while the

second formulates the required information for the five constructs. These are named as firm’s

performance (dependent variable), sustainable competitive advantage, firm’s strategy, human

resource strategy, and resources and competitive environment.

FIRM

PERFFORMANCE

Sustainable Competitive Advantage Human Resources Strategy

Resources and Competitive

Environment Firm Strategy

H1 H4

H3

H2





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Table 3-1 Variable Definitions, Source Authors Construct, 2018.

Variable Indicator Source

FP

Firm’s Performance

(dependent

variable)

Firm performance is a relevant

construct in strategic management

research.

Determining the appropriate

construct of performance involves

measure ranging from employee

satisfaction to shareholder wealth.

With regards to this study, the firm

performance is measured based on

the sustainable competitive

advantage, firm’s strategy, human

resources strategy, and resources and

competitive environment.

(Juliana & Luiz,

2012), (Cameron,

1986; Goodman and

Pennings, 1977;

Steers, 1975), Combs

et al. (2005),

(Carneiro, Silva,

Rocha & Dib,

2007)[80]

SCA

Sustainable

Competitive

Advantage

There is a significant relationship

between competitive advantage and

performance.

Sustainable competitive advantage

position is expected to lead to

superior performance.

Competitive advantage position will

lead to superior firm’s performance.

(Ma, 2000; Fahy,

2000; Gimenez and

Ventura, 2002; Wang

et al., 2003; Wiklund

et al., 2003; Bowen et

al., 2004; Morgan et

al., 2004; Ray et al.,

2004

FS

Firm’s Strategy

Firm’s strategy is reliant on and

constrained by the controlled

resources.

Firm’s strategy directs the

development and protection of

existing resources and new

resources, taking into account the

competitive environment.

Barney’s (1991),

Harris and Ruefli,

(2000), (Collis, 1991)

RCE

Resources and

Competitive

Environment

Resources have a rent-producing

possibility if they contribute to

building competitive advantage.

Resources rise the firm’s ability to

charge high prices for helping

competitive advantage.

(Newman &

Hodgetts, 2005),

(Plessis, 2007), Losey

(2005), Coff (1994)

HRS

Human Resource

Strategies

Human resource strategy is a critical

area of concern that firms

concentrate due to increased

competition.

Human capital is the key to

sustainable

advantage.

(Newman &

Hodgetts, 2005),

(Plessis, 2007), Losey

(2005), Coff (1994)





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Human resource strategies can

influence the future by ratifying an

organizational change to get a

competitive advantage.

Data Analysis Method

Data assembled from the structured questionnaires handed out to the sample size was analyzed

by the use of computer software known as Partial Least Square Equation Model. The

quantitative processing was analyzed using the version 3.0 of Smart PLS. The Partial Least

Square Equation Model was used (PLS-EM) because it does not consider distribution

assumptions as the covariance based - method of structural equation model. That is why PLS

is very robust than any other structural equation modeling procedures.

RESULTS/FINDINGS

Reliability and Validity

The reliability and validity of the dataset used for the partial least square structural equation

modeling need to be tested, and in accessing the reliability of their measuring instrument, the

assistance of the Cronbach’s alpha coefficient is needed. The Cronbach’s alpha coefficient

ranges from 0 to 1 with 0 representing no internal reliability while 1 indicates perfect internal

reliability. Henson (2001) stated that the acceptance of the internal reliability is subject to the

coefficient alpha value range which must be in between 0.6 to 0.7 representing acceptable

reliability. Also, the value will be regarded as good reliability if it ranges from 0.7 to 0.9, but

the value becomes excellent if it’s greater than 0. 9. For the values that fall outside the stated

range above, will be considered as poor and unacceptable reliability with the ranges of 0.5 to

0.6 and less than 0.5 respectively. We adopted Cronbach’s the alpha lowest value of 0.5 for our

study to ensure fair reliability.

Convergent reliability is described by Hair Jr. (2016) as the amount to which a quota relates

productively with different measures of a specific construct. They can be gotten by observing

the composite reliability, average variance extracted (AVE) and factor loading. In Table 3.2,

we presented the outcomes of the factor loading values to confirm the affirmation of a threshold

level of 0.6. The outcome values in Table 3.2 exceeds the 0.6 threshold level. The convergent

validity was proven by scrutinizing the average variance extracted (AVE), taking into

consideration the suggested value of 0.5 or above. With confirmation from the table 3.2 below,

all the AVE values outstrip 0.5 which endorses that all the constructs clarify almost all of the

discrepancies of its indicators. In agreement with the composite reliability, the results prove

that the experimental composite reliability values of 0.824 to 0.871 exceed the acclaimed value

of 0.7 or above projected by Hair Jr. (2016).





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Table 3-2 Convergent Validity Analysis (N=359)

Constructs Indicators

Discriminant

Standardized

Loadings

Cronbach’

s Alpha

Composite

Reliability AVE Validity?

Sustainable

Competitive

Advantage

SCA1 0.602 0.743 0.841 0.573 Yes

SCA2 0.763

SCA3 0.765

SCA4 0.874

Human

Resource

Strategy

HRS1 0.789 0.801 0.871 0.628 Yes

HRS2 0.784

HRS3 0.73

HRE4 0.862

Firm’s

Strategy

FS1 0.658 0.715 0.824 0.542 Yes

FS2 0.69

FS3 0.848

FS4 0.756

Resources and

Competitive

Environment

RCE1 0.773 0.757 0.847 0.583 Yes

RCE2 0.642

RCE3 0.807

RCE4 0.735

Firm’s

Performance

FP1 0.659 0.77 0.854 0.598 Yes

FP2 0.889

FP3 0.806

FP4 0.718

Discriminant Validity Analysis

The study used discriminant validity analysis statistically to set up the similarity or the

differences between two constructs. The study then applied Fornell-Larcker measurement to

define the discriminant validity by applying the conservative method. Fornell & Larcker, said,

the technique endorses constructs by associating the square root of Average Variance Extracted

(AVE) with the result of the latent variable correlation. The results in Table 3.3 confirm the

AVE’s square root values (in bold) in the diagonals were greater than their corresponding row

and column values.

Table 3-3 Discriminant Validity Measurement by Fornell-Lacker.

Sustainable

Competitive

Advantage

Firm’s

Performance

Human

Resource

Strategy

Firm’s

Strategy

Resources

and

Competitive

Environment

Sustainable

Competitive

Advantage 0.764

Firm’s Performance 0.661

0.773

Human Resource 0.502 0.649 0.793





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Strategy

Firm’s Strategy 0.616 0.531 0.613 0.736

Resources and

Competitive

Environment

0.407 0.651 0.658 0.682 0.737

Path Analysis

Since PLS conducting uses the manifest and the latent variables without any distribution

assumptions, the manifest variables of an explicit dormant variable must obtain 0.2 or more as

an acceptable value to compute for the path coefficient and total score of the latent variable on

the dependent variable. It was given that a manifest variable with 2.0 or more value backs the

discriminant validity test in a level to accept the validity results. With regards to the results of

our study, all the manifest variables had 2.0 or more value demonstrating that the variables

contribute towards the latent variable results. After obtaining the internal consistency

reliability, convergent validity, and discriminant validity, the study measured the R² values (that

is the size of the model’s projecting accuracy) and their respective t-values. To obtain

substantial, moderate, or weak endogenous latent variables, the corresponding R² values of

0.75, 0.50, or 0.25 respectively should also be achieved. From the structural model assessment

outcome in figure 3-1, resources and competitive environment with R² =0.867 and firm’s

performance of R² =0.741 are the two latent variables which are more than half of the variances,

therefore, can reflect as substantial variables.

Figure 3-1 The Path Estimation Results

The R² is an indication that the latent variables have explained 86.70% of the resources and

competitive environment variation and 74.10% on firm's performance variation. It, therefore,

gives a basis for examining the model’s fit of goodness. The results in Figure 3-1 showed that

hypothesis 1 with R² value of 0.861 obtained a substantial endogenous latent variable,





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hypothesis 2 with R² value of 0.699 is also a substantial endogenous latent variable. Meanwhile

hypothesis 3 and 4 with R² values of 0.111 and 0.199 respectively obtained a weak endogenous

latent variable. Therefore hypothesis 1 and 2 supports the path analysis outcome while

hypothesis 3 and 4 are unsupported.

Hypothesis Testing

The potency of the structural model and the testing of the hypothesis was examined using

bootstrapping, a resampling scheme that draws a large number of subsamples retrieved from

the first dataset. After successfully conducting a path analysis for the examination of every

variable and its contributions to the dependent variable, a t-test was further conducted. The

study embarks on this testing to detect which set of variables has a significant influence on a

sustainable competitive advantage’s impact on a firm’s performance and also to provide the

base to either accept or reject the hypothesis. This is centered on the rule of thumb which states

that the t-statistics value should be higher than 1.96.

Table 3-4 Result for T-Statistics Test

Hypothesis Independent

Variables

Dependent

Variables

Path

Coefficient

T-

statistics

H1 SCA → FP 0.861 28.108

H2 RCE → FS 0.699 11.421

H3 RCE → FP 0.111 1.967

H4 HRS → FP 0.199 3.378

Table 3-5 Results of Structural Model Analysis and Hypothesis Testing

Hypothesis Independent

Variables

Dependent

Variables

Path

Coefficient

T-

statistics

P-

Value Decision

H1 SCA → FP 0.861 28.108 0.000 Accept H1

H2 RCE → FS 0.699 11.421 0.000 Accept H2

H3 RCE → FP 0.111 1.967 0.069 Accept H3

H4 HRS → FP 0.199 3.378 0.002 Accept H4

The outcome proves that the study’s proposed hypotheses has a significant relationship with

their corresponding endogenous variables. Table 3-5 shows the relationship between

sustainable competitive advantage on firm’s performance as supported by H1: (β= 0.861, p <

0.01). Also, the relationship between resources and competitive environment, and firm’s

strategy is supported by H2: (β= 0.699, p < 0.01). H3 also establishes that resources and

competitive environment are directly related to firm’s performance with β= 0.111, p < 0.01.

Finally, H4, confirms the relationship between human resource strategy and firm’s performance

as positive (β= 0.199, p < 0.01).





43


DISCUSSIONS

Many studies of different researchers support the relationship between the competitive

advantage and firm performance positively. However, the nature and effects of firm’s

competence empirically suggests a productive chance for taking the advantage on competitors,

along with a contribution to further studies for searching the approaches of increasing firm

performance. The aim of a sustainable competitive advantage on a firm’s performance is to

concentrate on the resources and competitive environment, the reliability of firm’s strategy and

the implementation of high human resource strategies. By this means, it will have a significant

impact on the firm’s performance. Concerning this, the study’s primary objective is to ascertain

the effect of a sustainable competitive advantage on firm’s performance.

The study was necessary to other firms in Ghana because the Coca-Cola Company, the world’s

leading non-alcoholic beverage producer says they are not only going to take advantage of the

growing opportunities in emerging markets to continue their investment, but equally abet in

building sustainable communities in these markets. In so doing, it will continue to help them

use the resources and competitive environment to sustain their competitive advantage over

other beverage firms. The study’s outcome demonstrated that 86.70% of the resource and

competitive environment variation is elucidated by the impact of sustainable competitive

advantage on firm’s performance. Some specific components of SCA that were identified to

have an effect on firm’s performance are resources and competitive environment, firm’s

strategies, and human resource strategies.

This inferred that firms could build a constant high performance when they have higher assets

and competitive environments to operate. Coca-Cola Ghana limited can rely on the resources

that are worthy and erratic for the sustainable competitive advantage for high performance

because this advantage can be sustained over a long period of time. This is justified by (Barney

1991) that the Resource-Based View theory suggests that firms have resources which enables

them achieve competitive advantage and an advanced performance. It further supported these

literatures by (Miller & Ross, (2003) which states that the resource-based view (RBV) of the

firm predicts that specific resources types that the firm possessed and had power over, have the

potency and prospect to produce competitive advantage, which in the long run leads to higher

firm’s performance.

The study demonstrated that a sustainable competitive advantage is positively related to firm

performance. This is the first hypothesis the study proposed and the result provided by the t-

statistics is as high as 28.108 which signifies clearly, that there is a high influence on firm’s

performance. This result does not support the argument of (Ma, 2000) which states that

competitive advantage and firm’s performance are two different constructs and their

relationship appears to be complicated. However, it supports Fahy (2000) who argues that the

attainment of a sustainable competitive advantage position can be expected to lead to higher

performance.

With regards to resources and competitive environment which the study proposed that it has a

moderating effect on firm’s strategy, the t-value results of 11.421 demonstrate a highly

significant value. This supports Harrison et al. (2001) which states that firm’s strategy acts as

a support in the organization of firm properties in the competitive environment with the

intention to cause sustained competitive advantage. It also supports more existing literatures

such as ( Powell, 2003; Porter & Kramer, 2006) which states that a well-formulated and

instigated strategy of a firm can utilize a significant influence on attaining a level of competitive





44


advantage.

Human resource strategies have revealed to have an influence on organizational competitive

advantage and performance positively. The study’s results also supports that human resources

such as top and middle management, and administrative and production employees are

similarly capable to clarify the extent of firm’s competitive advantage and the outcome of the

firm’s performance ( Morgan et al., 2004) The Coca-Cola Ghana limited can focus more on the

resources in its competitive environment since the outcome of the study demonstrated and

supported the assentation of the resource-based view, which discusses that to develop a

competitive advantage, the firm must have resources and capabilities that are superior to those

of its competitors. This will help Coca-Cola Ghana limited to maintain its superiority because

without it the competitors could replicate what Coca-Cola Ghana limited was doing and their

advantage would quickly disappear.

Implications to Research and Practice

The Coca-Cola Ghana limited can focus more on the resources in its competitive environment

since the outcome of the study demonstrated and supported the assentation of the resource-

based view, which discusses that to develop a competitive advantage, the firm must have

resources and capabilities that are superior to those of its competitors. This will help Coca-Cola

Ghana limited to maintain its superiority because without it the competitors could replicate

what Coca-Cola Ghana limited was doing and their advantage would quickly disappear. Also,

resources are the firm’s specific assets which are valuable for the creating of differentiation

advantage. Therefore, other competitors can easily acquire being in the form of patents and

trademarks, installed customer base, brand equity, proprietary know-how and reputation of the

firm.

CONCLUSIONS

The paper’s primary objective was to examine and ascertain the impact of a sustainable

competitive advantage on firm’s performance using evidence from Coca-Cola Ghana limited.

The study provided the precise objectives to show a flawless understanding of firm’s

performance and the impact of its sustainability. These were given as identifying how firms in

the same industry achieve competitive advantage, identifying ways to sustain competitive

advantage, examining the effects of sustained competitive advantage on a firm’s performance,

and assessing how sustained competitive advantage can improve a firm’s performance level.

The study proposed four hypotheses in which when the data was analyzed and the hypotheses

tested, it supported the hypotheses and the outcome proves that the hypotheses suggested by

the study, had a significant relationship with their corresponding endogenous variables. Also,

the results of the partial least squares structural equation modeling analysis showed that

resource and competitive environment have a higher impact on firm’s performance with a

sustainable competitive advantage in play.

It is therefore essential that Coca-Cola Ghana limited can concentrate on its resources and the

competitive environment if it wants to sustain its competitive advantage to enhance the firm’s

performance in the beverage industry. It could further rely on the human resource strategy of

the firm to sustain its competitive advantage to improve the firm’s performance with other

prototypes like, the firm’s strategy also found to be positively connected to the fruitful results

of sustaining competitive edge to improve the firm’s performance.





45


Future Research and Limitations

Small sample size; since it is the influential factor for the study’s outcome. It should all the

time be an appreciable size to reflect the size needed truly. The study used a standard size within

four regional capital cities of Ghana, in contrast to its ten regional capitals. Also, the study

could not compare the results to other beverage companies to demonstrate how Coca-Cola

Ghana limited can really sustain competitive advantage to justify the results. It is likely that the

research results will not be aplicable to another firms’ performance since it was based solely

on a beverage company. For further research, it is highly recommended that population size

should be broadened to cover all the regional cities to reflect national results truly. Also, we

could compare Pepsi-Ghana limited as a future topic since they are the primary competitor

when it comes to beverage companies in Ghana.

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